The Biggest Problem In The Construction Industry

My name is Isaac Barlow. I’m the owner of Olson Construction Industries. Olson is a rapidly growing construction company operating in Northern and Southern Utah.

I created Olson in March of 2015 with the intent to install millwork on small commercial projects only; But, due to the quality and reliability of my team, word quickly spread, and we found ourselves in the booming multifamily lane. Olson grew from 4 installers to over 40 in 8 months.

As my team expanded and the size and complexity of the projects increased, I became keenly aware of how cost driven and fierce the competition was at every level, from the general contractor to the suppliers, to the installers, and so on. The construction industry was so focused on COSTS and "saving money" that it forced contractors and suppliers to cut corners in every possible way to meet the market demands for a lower price; This (of course) initiated a domino effect of inferior products, shoddy workmanship, start-stop environments, ornery superintendents, back charges, angry suppliers, ridiculous one sided contracts and continuously late projects. This competition was pressuring me and my installers to sacrifice quality for speed just to ensure profitability.

There were times I would bid projects with fair margins, then John Doe (doing business out of a Honda Accord) would come in 50% lower. Numerous times from the illusion of “saving money” the GC would choose the lowest bid and it wouldn’t take long before that project was in shambles. I really began to wonder if it was possible to provide real solutions to these chronic problems; not realizing at the time, that I was managing my own business using the same mentality.  

One day a friend of mine introduced me to a business consultant. This man sat quietly and listened to my story. After asking a few questions he said, “I would like to come on site and see your processes.”  The next week we walked all my projects. He took notes, interviewed my employees, then returned to the office and dissected my company, laying it out on a marker board.  

The Problem:

I sat back shocked at the lost opportunities sitting right under my nose. For the first time I saw the magnitude of the problem, a CHRONIC problem. I saw clearly that the root cause of all the turmoil in our industry came from focusing on costs. From the project owner all the way down, almost everyone’s focus was on costs; VERY, and I mean VERY few, were focused on productivity. My own obsession with costs was a huge factor of my reality.    

What to do?

I immediately set out on a corrective course, a complete paradigm shift. My team and I stopped focusing on costs and started focusing on productivity. We developed a new strategy, to put correct measurements in place (for we can’t improve what we’re not measuring) and focus the entire company on productivity. We embraced a management philosophy (TOC) virtually unknown in the small business sector. We also created a software tool as the measuring tape, to help our teams focus on productivity for each project. These changes helped empower our foremen and taught them good decision-making habits. We called the software program VisionTrax, aptly named for the distinct visibility and insight it brings to projects. It was like running the company with the lights on and our eyes open.

When we began using VisionTrax my team and I became aware of how much money we made or lost per project (and company wide) by the end of the day. It allowed us to set productivity targets as a benchmark for our teams. The foreman could then see what it meant (in terms of dollars) to get at least one more unit installed, or 60 more sq. ft, or 50 linear ft etc. with the same crew in an 8-hour day. We would quickly see if productivity started to drop on any project. My teams would identify constraints, make decisions on how best to eliminate them (even if it meant increasing costs) and by the end of the week view the results of those decisions. As I learned to lead and get my managers focused on the right measurements, we began to see huge benefits; we were completing projects on time with half the manpower, and profitable.  

The Results:

It’s been an uphill climb, and we still have a long way to go, but we are making good progress. Olson is now the parent company of Revere Cabinetry, Artisan Millwork and Legacy Tub repair. We have recruited and retained some of the best installers in the state covering scopes of cabinets, trim, counter tops and hotel doors just to name a few. We think as a team and work as an integrated whole. With the VisionTrax program, we hope to not only change, but to help transform the construction industry. VisionTrax is an integral part of our success. We’ve been using it in our group of companies for the past few years and it’s been so valuable we couldn’t and wouldn’t operate without it. VisionTrax is now being used by companies across the western United States and those companies are experiencing similar results.

If we in the construction industry can learn to shift our focus from price to productivity, we will be better positioned to deliver quality projects on time and under budget. Lasting relationships will be formed, owners will fill their buildings with tenants, everyone will make money, and no one will be over worked. We will enjoy the unparalleled ability to satisfy the needs of our market and the construction industry will be transformed.